LONDON: Copper prices were on track on Friday to post their biggest weekly gain in three months, helped by falling inventory and expectations of more economic support from top consumer China.
Three-month copper on the London Metal Exchange was up 1.1% at $8,407.5 a metric ton as of 1228 GMT. On a weekly basis, the contract is up 2.8%, gaining the most since mid-November.
Copper, widely used in power and construction, lost 2.4% so far this month when the market of top consumer China was closed for New Year celebrations.
More support from Chinese government could come in varying forms, including measures to boost consumption, which could be positive for China’s base metals demand, said SEB chief commodity analyst Bjarne Schieldrop.
Last year’s clampdown on private sectors, and other measures with negative impact on consumer confidence could be reversed as Chinese government prioritised economic stability, Schieldrop said.
“Overall fundamentals of copper are still solid,” he added.
Copper ticks up on softer dollar, solid fundamentals
The volume of copper stored in LME-registered warehouses ropped to 132,525 tonnes, reaching its lowest in six months.
The decline in copper availability lent support to cash prices, reducing discounts against longer-dated contracts. Cash-to-three month spread last traded at $88 a metric ton, compared to a record high of $113.3 on Feb 9.
The dollar index was flat after a pullback on Thursday following the surprising decline in January U.S. retail sales.
A weaker U.S. currency makes dollar-priced metals less expensive for holders of other currencies.
For other metals, LME nickel was up 0.8% at $16,380 after Australia listed the battery metal as “critical mineral” to support the crisis-hit operations.
The country’s nickel sector is facing thousands of job cuts after a jump in Indonesian supply saw prices plunge 40% in a year.
Zinc gained 0.6% to $2,369 with continued inflow to Singapore on Friday, boosting its stocks to their highest in over 32 months. Aluminium rose 0.5% to 2234.5, lead gained 0.7% to $2,055. Tin dropped 0.2% to $27,240.
Meanwhile, LME aluminium edged 0.1% lower to $2,222.50 a ton.
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